Influence Of Financial Risk Management On Financial Perfomance Among Small Medium Enterprises In Mavoko Constituency, Machakos County

Abstract

The study sought to establish the Influence of financial risk management on financial performance of SMEs in Mavoko Constituency, Machakos County. The study adopted a descriptive design of research and a target population of 34,517 SMEs operating in Mavoko constituency from which a sample of 100 participants using stratified random sampling with the help of Yamane’s formulae. Data was collected through primary instruments such as questionnaires and interviews to collect data for analysis. Data collected was analyzed using inferential and descriptive statistics which involved use of frequency tables, percentages and regression analysis. The study established that; liquidity risk management is positively and significantly related to financial perfomance of SMEs in Mavoko constituency, credit risk management is positively and significantly related to financial perfomance of SMEs in Mavoko constituency, foreign exchange risk management was found to be positively and significantly related to financial perfomance of SMEs in Mavoko constituency and lastly, equity risk management was also found to be positively and significantly related to financial perfomance of SMEs in Mavoko constituency. The study made various recommendations such as; business owners to seek more training on credit management from financial and educational institutions, SME owners to consult experts in the business field in order to gain knowledge on how best to make good use of the resources they have and small business owners are advised to scan the environment so as to have a better understanding of their business opportunities and threats.